A blog for Small Business Consultants and the vendors who serve them. It contains Opinions on business success, News in the SMB consulting space, and Information on what I'm up to.All material Copyright (c) 2006-2017 by Karl W. Palachuk unless otherwise noted.

Sunday, January 27, 2008

What Are Your Minimums?

When I start a longterm, serious, important business relationship with someone, I eventually ask this question:

How big does a deal have to be for me to bring it to you?

You should consider the same thing in your business. How big does a deal have to be to get your attention?

If your answer is $1, or $100, or even $500, then you are destined to be a sole proprietor who never advances beyond where you are today. Sorry. It's true.

For most SMB Consultants on a growth track, the common responses are in the range of $5,000, $10,000, and $25,000.

Perspective: What is your minimum customer size? What is your minimum service agreement size?

If you have a "silver" package with a minimum of $500 per month, then your minimum client size is $6,000.

So let's say I come to you with a proposal to do some business with me. And let's say I offer you the opportunity to make a whopping $300. Interested? How about for $500? $1,000? As the numbers get larger, you'll eventually become interested.

On one hand, we're always tempted by money. On the other hand, what do we need to give up to make that money?

I've often been tempted to do a job because someone's in a hurry, their server's crashed, or they're crying on the phone (okay, that one's not so common, but it does happen).

I've learned to have the presence of mind to ask about the long-term relationship. The options are pretty simple:

1) "We just need this fixed. Then we're done." - - Bzzzzzzzzzzzzzzz. Thank you for playing. Even if this job is worth a thousand dollars, it's not worth it. I have clients under contract who are relying on us to keep their systems purring. So I have to be pretty bored to take on this job.

2) "If you do well on this job, we'll sit down and talk about a service contract." - - Ahhh. Much better. Whether they're just agreeing due to the pressure, or they're really interested, you've got an opportunity. An opportunity is pretty much all you can ask for. Once you kick butt and take names with the emergency, you'll have a chance to give your sales pitch based on past performance.

3) "You're our company! Let's sign a deal now so that as much of this as possible is covered by the service agreement." - - Nirvana. You still have to kick butt. But now you can fix the immediate problem with an eye to documenting the network and getting the relationship off on the right foot.

-----

Outside your core business there are also opportunities. I've had several "opportunities" to make a little extra money this month. In two particular cases, I think the folks who brought me opportunities were surprised by my resistance.

Just so you know, KPEnterprises' answer to the big question is $6,000. Last year it was $5k. The year before it was $3k. Just as with any other metric, this changes over time.

For me personally, a new venture needs to be closer to $10k in order to take my attention off the other things I have going. And that number is only so low because I have a staff I can funnel opportunities to.

Example:

Let's say I come to you and say I want to get you interested in a Podcasting business. I'll provide scripts, powerpoints, examples, catalogs of hardware and software. You can expect to make $500 - $1,000 on each entry-level job. After you hook a really eager client, they could be worth twelve projects a year at $1,500 each. Maybe more.

If your response was "Hell Yes!" click click click "Sign me up!" then you need to slow down and think about what you're doing.

1) Is this your core business? If not, where does it fit?

2) What does this cost you in real money, out of pocket, over the next few months?

3) What does this cost you in time off task with respect to your current, profitable business?

4) Is this a business you know, understand, find exciting, and want to get into?

5) Do you already have clients who would gobble this up, or do you need to "start over" with them regarding sales of this product?

-----

As entrepreneurs, it's good for us to be excited by opportunities. We're like pack rats. We see shiny objects and we want to pick them up. But you can't pick up every shiny opportunity out there.

You have to have some filtering system. Money is one filter.

So let's say something does meet your threshold. What's next? Do you eagerly sign up, make commitments, and jump in? I hope not.

Next time we'll discuss how to come up with a quick mini-business plan.

We Donate with Every Sale!

Translate

Managed Services on Amazon

Hot Books for Managed Services

This four-volume set is the definitive guide to Managed Services. From the front office to the tech department, we cover it all. Every computer consultant, every managed service provider, every technical consulting company - every successful business - needs SOPs!

When you document your processes and procedures, you design a way for your company to have repeatable success. And as you fine-tune those processes and procedures, you become more successful, more efficient, and more profitable. The way you do everything is your brand.

How to Deliver Successful, Profitable Projects on Time with Your Small Business Clients

Small Business project management is simply not as complicated as project management in the enterprise. But small business projects have the same challenges as enterprise projects: They need to achieve their goals effectively, on time, and within budget.

They also face the same primary challenge – staying inside the scope of the project!

This great little book provides a simple process project planning and management process that is easy to learn and easy to teach to your employees, fellow technicians, and sub-contractors. You’ll learn to track any project, explain all the stages to clients and employees, and verify that everything is completed on time and under budget.

The authors show you a great technique for making sure that scope creep is a thing of the past! Make every project a successful and profitable project!

DNS and DHCP - On the Server or The Firewall? A few years ago, one of the major "truths" about our business changed. It had lo...

FTC Disclosure Statement

I make every attempt to honestly state what I believe and enjoy the freedom of posting whatever I feel like on this blog. This is a big complicated world and I have many interconnected personal and professional relationships.

I may in some way receive money or other benefits from any of the products, services, or companies mentioned in this blog as a direct or indirect result of my actions on and off this blog. Any experience mentioned here is just my experience and I have no knowledge about whether it represents a typical experience with any products, services, or companies mentioned.

Whenever it is possible to have both an honest and a misleading interpretation of my statements, please assume honesty. Thanks. - karlp